As long as marginal cost is below average cost, average cost will be:
a. falling.
b. rising.
c. constant.
d. changing in a direction that cannot be determined without more information.
QUESTION 2Cooperation in repeated prisoner's dilemma situations seems to be enhanced by all of the following except
a. limited punishment schemes
b. clarity of conditional rewards
c. grim trigger strategy
d. provocability--i.e., credible threats of punishment
e. tit for tat strategy
QUESTION 3The reason we study the sequential labor negotiation game:
a. Is to show that these games usually go on for rounds and rounds
b. Is to show the importance of the first mover being able to commit to an offer
c. Is to show the importance of the second mover being able to commit to an offer
d. Is to show the problems of prisoners dilemmas
QUESTION 4A linear total cost curve which passes through the origin implies that:
a. average cost is constant and marginal cost is variable.
b. average cost is variable and marginal cost is constant.
c. average and marginal costs are constant and equal.
d. need more information to answer question.
QUESTION 5The chain store paradox of an incumbent who accommodates a finite stream of potential entrants threatening to enter sequentially numerous markets illustrates
a. backwards induction
b. the unraveling problem
c. subgame perfect equilibrium
d. best reply responses
e. all of the above
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